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The lowdown

• 🍏 TSMC to invest $40 billion into manufacturing plants in Arizona. Apple says it will purchase output.

• 🏦 The Trump Organization has been convicted of defrauding tax authorities in a 15-year-long scheme.

• ✈️ Airlines are expecting their first industry-wide profit since 2019 as the world moves on from Covid.

Featured Stories

Blackstone

On Thursday last week, alternative investment management company Blackstone limited redemptions from its $69 billion unlisted Real Estate Income Trust (REIT). Withdrawals were halted after the fund, which invests in property, reached its monthly redemption limit — 2 per cent of net assets a month or 5 per cent a calendar quarter.

Having a mechanism like a monthly redemption limit in place is necessary in a fund that invests in less-liquid assets such as property. It can also prevent the kind of liquidity crisis sometimes seen by failing banks and more recently seen by FTX (though there may also have been fraud in FTX’s case).

Investors in the REIT were reportedly spooked after Blackstone was seen as slow to adjust valuations on property investments as interest rates surged. Investors making losses elsewhere were able to use the fund as a source of liquidity without realizing any losses, with valuations unchanged.

This is not to say that valuations are inaccurate. CEO Stephen Schwarzman and COO Jonathan Gray certainly don’t think so. Together they have poured $100 million of their own money into the fund, ($) in a strong positive signal for the fund.

Investors may not be convinced. Blackstone’s Private Credit Fund has also now hit redemption limits. Getting blood from a stone is hard but getting your cash back from Blackstone is becoming impossible.

For a deeper dive into REITs, take a look at this Twitter thread.

The content we're consuming today

• Acquired podcast: The Complete History & Strategy of Stratechery.

• Chris Miller’s book Chip War: The Fight for the World's Most Critical Technology – The winner of the FT’s Business Book of the Year Award ($).

Off-balance sheet items

• Warwick Davis is reprising his 1988 role as Willow in this new Disney+ series. This article explains why streaming services keep “slamming defibrillator paddles on a sleeping franchise.”

The bottom line